South Texas Oil Company Signs Letter of Intent To Acquire Additional Acreage.AUSTIN, Texas -- South Texas Oil Company (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : STXX STXX Struts for Transforming Xml with Xsl ), an independent oil company active in the acquisition, development and operation of oil and gas properties with proven reserves, today reported it has signed a Letter of Intent for the purchase of at least 50% and up to 75% working interest in approximately 20,000 acres in the DJ basin in Northeast Colorado. South Texas Oil's President, Murray Murray, river, Australia Murray, principal river of Australia, 1,609 mi (2,589 km) long, rising in the Australian Alps, SE New South Wales, and flowing westward to form the New South Wales–Victoria boundary. Conradie stated, "We intend to purchase at least 50% and up to a 75% working interest (WI) and 60% royalty interest royalty interest The proportional ownership interest by the owner of oil and gas rights in income produced by the asset. See also overriding royalty interest. (RI) in the 20,000 acres being offered at a cost of approximately $15 million for a 75% WI. The purchase will be undertaken by issuing approximately 4,8 million shares of South Texas Oil restricted common stock." Significant points of interest for the field are as follows: * Drilling and recovery in the area commenced in the mid 1950's and virtually all activity in the area ceased in the mid 1980's. * A report prepared by an independent petroleum engineer based on a field of 3,800 acres within the 20,000 acres shows estimates of approximately 20 million barrels of oil, 9 billion standard cubic feet of solution gas and 8.3 billion standard cubic feet of free gas in the gas cap with only 30% of these known reserves recovered. * With today's technology versus that of 20 to 50 years ago, i.e. frac techniques, drilling techniques, etc., the prospects for significant recovery of these reserves or new primary production and completion using these techniques is excellent. * A test well was recently drilled and completed with results of 500 mcf per day of gas production. * Three additional wells are scheduled to be drilled and completed in the next 90 days. * The entire 20,000 acre field offers the potential of over 500 wells. South Texas Oil's President, Murray Conradie continued, "We are very pleased to have the opportunity to acquire this acreage as the area offers multiple pay zones for both oil and gas, with some wells being capable of producing both oil and gas. The area additionally offers excellent secondary recovery opportunities using modern recovery techniques. Furthermore, a significant amount of the infrastructure which includes gathering pipelines already run throughout the area which translates to significant cost savings in the recovery of the reserves." "This is a very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. time for the oil industry and we are confident that we are establishing the company for long term continued growth by adding gas recovery operations Operations conducted to search for, locate, identify, rescue, and return personnel, sensitive equipment, or items critical to national security. and significant reserves of both oil and gas. The closing of this acquisition is subject to an independent geological ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. evaluation being conducted and a fairness opinion Fairness Opinion A report put together by qualified analysts or advisors providing to key decision makers an evaluation of and facts about a merger or acquisition. Notes: A fairness opinion serves as a document used for guidance in a merger, takeover, or acquisition. issued." concluded Mr. Conradie. About South Texas Oil Company South Texas Oil Company was formed for the purpose of the development and operation of oil properties with proven reserves. South Texas Oil currently has 5,244 acres of oil properties made up of 3,605 acres in Frio County, Texas Frio County is a county located in the U.S. state of Texas. In 2000, its population was 16,252. It is named for the Frio River. The seat of the county is Pearsall6. Geography According to the U.S. and 1,639 in Atascosa County, Texas Atascosa County is a county located in the U.S. state of Texas, and was formed in 1856 from Bexar County. As of 2000, the population was 38,628. Its county seat is Jourdanton6. Atascosa is named for the Atascosa River. (See List of Texas county name etymologies. . For further information: www.southtexasoil.com Certain statements made in this press release contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve a number of risks and uncertainties. This forward-looking information is based on certain assumptions, including, among others, presently known physical data concerning size and character of reservoirs and economic recoverability. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, operations involve numerous risks and uncertainties, many of which are beyond South Texas Oil's control, which could result in expectations not being realized or otherwise materially affect the financial condition, results of operation and cash flows. Additional information regarding these and other risks is contained in South Texas Oil's filings with the Securities and Exchange Commission. |
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